NVIDIA just lost $5.5 billion to U.S. export rules
NVIDIA is bracing for a $5.5bn hit after the US government tightened export rules to China, requiring the chipmaker to obtain licenses to export its popular H20 AI chip, according to BBC.
The new rules, announced last week, are part of an escalating trade war between the US and China, with both countries imposing steep trade tariffs on each other.
NVIDIA shares dropped almost 6% in after-hours trading following the news. The company stated that the license requirement “will be in effect for the indefinite future” and is aimed at preventing covered products from being used in or diverted to a supercomputer in China.
The $5.5bn hit estimated by NVIDIA is associated with H20 products for inventory, purchase commitments, and related reserves. Marc Einstein from Counterpoint Research consultancy believes NVIDIA can bear the cost but notes that this move may be a negotiating tactic.
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Rui Ma, founder of the Tech Buzz China podcast, expects the US and China AI semiconductor supply chains to be “fully decoupled” if restrictions stay in place, adding that Chinese customers may avoid dependence on US chips due to an oversupply of data centers in China.
NVIDIA’s AI chips have been a key focus of US export controls amid the ongoing tech supremacy race between the US and China.